The Labour party outlined its nationalization plan in 1945 when it released its electoral document which was tilted Let Us Face The Future. In this document the Labour Party stipulated that there were some industries which had to be granted state ownership and management in order to provide direct services to the nation. However, this document also outlined that there were small business which had to be left in the hands of the private sector and allowed to continue with their useful work to the public (Foreman-Peck, 2004). The Labour Party document also recognized that there were big industries which were not yet ripe for public ownership but which required to be constructively supervised in order to meet the needs of the nation and not to prejudice national interest in any way through restricting anti-social monopoly or through cartel agreement, who only cares for their capital structure ownership and profit and in the process lower standards of living for all people who directly or indirectly depend on them.
Therefore, the Labour Party outlined that in view of the above circumstances if it was elected into office, it would nationalize fuel and power industries which were important to the build up of the economy. It promised to nationalize coal, gas, and electricity industries, inland transport, Bank of England, telecommunication, civil aviation, and iron and steel sectors.
Between 1945 and 1951, the Labour government undertook political programme that were heavily rooted on collectivism. This was the starting of nationalization of industries in the country, as the state sought to play more crucial role in the economy. The first and the Second World War had taught the government that state involved in the economy was beneficial especially in times of economic crisis (Lewis, 1996)). The future of the post-war economy was to be based on collectivism and this was supported by the conservative Britons. However, unlike in most other countries which have enacted full nationalization, nationalization in Britain took different times in the course of time with the emerging knowledge about economic management. There emerged a form of nationalization where the state played a directing role rather than a controlling role. However, the operationalization of state control remained rooted in Keynes economy and state involvement.
Immediately the Labour Party was elected into office, it carried out its earlier planed nationalization programme except that the nationalization of steel and iron industry was differed until 1950. In 1949, the Labour government released another policy statement, Labour Believes in Britain, in which it did not extend the large scale nationalization program measures but it indicted that public ownership was also considered in some sectors like water supply, mineral, meat wholesaling, cold storage, sugar beet production, and in sugar refining. This document state that the government should be given powers to organize the new public enterprise to prevent them from failing during an economic decline time (Daunton, 2001). The government was committed to take over the existing business once they were offered for sale and operate them in a fair and square manner to compete effectively with existing private firms.
The guiding principle in nationalization in Britain was that although it was widely thought that nationalization may show that the country was aligning to socialism government would do its best to ensure that nationalized industries were managed like other industries (Peden, 1985). The principle would ensure that nationalized industries were operated just like private business through use of public corporation rather than having direct government control. The pre-1930 ideas of having strict government control were widely rejected in favour of new ideas that would ensure state guidance and supervision of the operation of the nationalized industries (Elbaum and Lazonick, 1984). Under the nationalization policy, the old management was retained while the owners of the industries were given treasury bonds which covered the full market cost of their holdings in the industry. Essentially, the role of labour remained unchanged. Collective bargaining was retained as bases for negotiation between industrial management and the labour with the right to strike still unaffected (Pelling, 1993). However, analysts point out that this was one of the weaknesses that were allowed in the British economy as it led to decline in the manufacturing industry and workers gained more power through their unions and this hampered industrial growth and developed, scaring away future investors (Chester, 1980).
However, it had first to be taken through the parliament for voting. Parliament was not opposed to the Labour Party Plan and in 1948 it gave the green light for implementation of nationalization in different economic sectors and industries including Bank of England, coal mining industry, hospitals, iron and steel, communication, gas and electricity, and railways (Murphy, 1952). Consequently, owners of these industries were given enough compensation to cover their full ownership. At the same time, the government also began an ambitious system of social security which was implemented through enactment of National Insurance Act, Industrial Injuries Act, National Assistance Act, and the National Health Service Act, which were aimed at providing workers with free medical care. This was the beginning of the British welfare state. However, to implement the welfare program, the government needed more resources and this increased appetite for more profitable operations.
In 1947, there was a ranging debate about iron and steel which brought in a new retreat from the idea of nationalization (Murphy, 1952). This debate perhaps confirmed that the government was somehow reluctance to take operations in the manufacturing industry. The question of nationalization took a dip since then only resurfacing in 1951 and not until 1974 again.
To review some of the industries which were nationalized, it is evident that most of them had been questionable for a long time. Looking at the coal industry, it had been performing unsatisfactory for many years and generally it showed overall poor productivity (Gilligham, 1980). British coal mines were nationalized and brought under the National Coal Board. Operations in the coal industries were somehow complex and the idea for nationalization had been accepted by coal miners even before the 1945 idea of nationalization. Coal mine owners were paid a total of £165 million while the government dished £150 million to the National Coal Board to enable it modernize the coal mining system (Murphy, 1952). However, nationalization of the industry did not work as had been expected as it shows lack of preparation for public ownership and failure by the government to stabilize the operations of the industry. There were also no incentives to increase coal production to meet the increasing demand. By 1946, Britain was production 3,300,000 tons per week and this fell short of the needed 5 million tons to sustain the demand (Murphy, 1952).
In telecommunication and civil aviation industries, the theory of behind nationalization of these two industries was to provide efficiency and safety. Nationalization of the telecommunication industry was recommended by a conference that was held in 1945 and was meant to make it more reliable (Humphreys, 1976). In civil aviation, British Overseas Airways Corporation which had been formed in 1939 was given power to take over air transport services which were previous operated by Imperial Airways and British Airways Ltd (Murphy, 1952). It was argued that in a small country like Britain, civil aviation had to be nationalized to insure and make it strong to meet the needs of the people. In the transport sector also, found mainline railway companies were merged and brought under government control for chief economic purposes.
In gas an electricity supply, the supply and transmission of electricity was handed over to Central Electricity Board which was formed under Electricity Supply Act of 1926 (Murphy, 1952). In gas supply and independent committee reported in 1945 that all existing gas undertaking should be purchased by the government and reorganized them under ten regional boards to make them more effective.
The Bank of England was also nationalized and brought under government control with management appointed by the monarch. In 1946, all the existing capital stock for the bank were transferred to a nominee of the treasury and holders of Bank stock were paid dividends to ensure that they enjoyed similar payment as they had before the nationalization.
These were just few examples of how nationalization was carried out in Britain in the course of the twentieth century. A review of nationalization in Britain shows that it operated under different ideals from those used in other countries like although it was also driven by the financial pressure the government was feeling after the end of the Second World War (Hollowell, 2000). The nationalization policy did not follow the leftist’s ideals but this could have been affected by the emergence of capitalism that was already taking root in the world. Nationalization was taunted by its performance between 1951 and 1979, when nationalization was driving the economy Britain had slow pace of economic growth and long period of stagnation (Millward and Singleton, 1995). Nationalization increased during this period and at the same time the welfare state as also expanding. At the same time, the government was not keen on holding on industries that did not perform and during the same period, a significant number of denationalization also occurred.
In conclusion, Britain experience with nationalization can be considered as failure because it resulted to negative economic growth. There were long period of stagnation while labour movements grew stronger and strikes happened now and then. It can therefore be pointed out that nationalization was a major facto that led to decline in industrialization in Britain as it became unattractive due to strong government control and strong workers union.
List of Reference
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